Schumpeter’s Market

Schumpeter’s Market

Enterprise and Evolution

David Reisman

Schumpeter was an interdisciplinary political economist who made institutional transformation the centrepiece of his theory of supply and demand. This comprehensive monograph reconstructs and assesses Schumpeter’s contribution to the restless economics of entrepreneurship, disequilibrium and search. Examining the evidence from all of Schumpeter’s published work, the book fills a significant gap in the literature of economic thought. Partly because Schumpeter was so prolific, partly because he touched on so many interrelated topics, there have been few books that have sought to span the whole of this important author's influential insights.

Chapter 14: Conclusion

David Reisman

Subjects: business and management, entrepreneurship, economics and finance, methodology of economics


The devil is in the details. There is hardly a prediction or a conjecture in the whole of Schumpeter’s economics that can be bought at face value. The small firm is not disappearing. Bank credit is not essential for business initiative. The large firm is not necessarily the mould-breaking innovator. Oligopoly is not monopoly but a form of competition. Large organisations have U-shaped costs that display scale diseconomies after a point. Zero interest makes no sense save in the arid and inconceivable stationary state. The bourgeois class is not dependent on its entrepreneurial segment for its status or survival. Entrepreneurship within the organisation means that the individual entrepreneur is not indispensable for economic advance. Corporate shareholders need not prove functionless or passive. Calculativeness can complement personality and need not stunt it. Rationality is as compatible with the corporation as it is with the plan. Citizens can vote down the socialist dystopia in favour of the capitalist status quo. Productive efficiency through social discipline is another name for a police State that frightens out creative destruction. Ideals in socialism can produce devolved new lifestyles that challenge the dominance of central control. Market socialism with commanded quantities leads to unacceptable rents and unexplained inefficiencies. Social democracy can be a viable halfway-house. A State bureaucracy does not face the same pressures from the top that discipline the office-holders in private business. The intelligentsia is not anti-capitalist and not very powerful. Unemployment and cycles can be perceived as macroeconomic threats to uncoordinated exchange. Evolution...

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